What is the Opportunity Zones Program?

What is the Opportunity Zones Program?

The Tax Cuts and Jobs Act of 2017 ushered in a variety of changes to the way corporations are taxed, but it also created a new tax incentive program to encourage capital investment in economically distressed areas of the U.S. Via the use of opportunity funds, corporations can attract investment into multifamily and commercial real estate, as well as stock or partnership interests in companies that operate in or do a significant amount of business in an Opportunity Zone.

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How the CMBS Securitization Process Works: A Guide

How the CMBS Securitization Process Works: A Guide

When a conduit lender issues a CMBS loan, they will pool it in with a variety of other loans in order to create a commercial mortgage backed security (CMBS). These CMBS are similar to bonds, in the sense that they are traded on the open market. From an investing standpoint, CMBS are often compared to RMBS (residential mortgage backed securities), which are securities based on residential mortgage loans.

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Rental Assistance Demonstration (RAD): A Guide

Rental Assistance Demonstration (RAD): A Guide

Rental Assistance Demonstration, or RAD, is a Department of Housing and Urban Development (HUD) program, which seeks to help investors preserve affordable housing across the U.S. To do this, the RAD program allows investors using four HUD legacy programs the ability to convert their housing into long-term Section 8 contracts. This helps investors by giving them more flexibility in terms of acquiring the financing to repair their properties, including making it easier to apply for the LIHTC (Low-Income Housing Tax Credit Program).

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The Pros and Cons of CMBS Loans: A Guide

The Pros and Cons of CMBS Loans: A Guide

While CMBS loans all but disappeared after the 2008 market crash, in the last 4-5 years, the CMBS market has been stronger than ever, with nearly $88 billion of loans issued in 2017, and October 2018 numbers showing a loan volume of nearly $65 billion from the beginning of that year. CMBS came roaring back for a variety of reasons, including the fact that they often provide the highest leverage loan a borrower can get for properties in secondary and tertiary markets. However, CMBS loans aren’t ideal for everyone— as they can provide a particularly poor loan servicing experience rife with significant prepayment penalties.

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CMBS Lenders vs. Life Companies: What You Need to Know

CMBS Lenders vs. Life Companies: What You Need to Know

CMBS lenders and life companies often compete in the same space for large real estate deals. Both have significant advantages and certain disadvantages. For instance, life company loans typically offer lower rates and significantly better loan servicing, while CMBS loans are much easier to get approved for and offer benefits including interest-only periods (and even full, interest-only loans).

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Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know

Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know

SASB CMBS transactions involve the securitization of a single loan, which is typically collateralized by one, very large property. Single Asset Single Borrower transactions are typically based on loans of at least $200 million, and often range up to $800 million to $1 billion+. While most are collateralized by one property, SASB loans can also be collateralized by a group of cross-collateralized/cross-defaulted properties all owned by the same borrower (much like a Fannie Mae Bulk Delivery Loan or Fannie Mae Credit Facility financing, though with much less flexibility).

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CMBS Spreads: What You Need to Know

CMBS Spreads: What You Need to Know

A CMBS spread, also referred to as a CMBS credit spread, is the difference between the interest rate of a CMBS loan and the current U.S. Treasury rate. Right now (as of February 2019), the 10-year U.S. Treasury rate us 2.69%, so, with most CMBS loan rates ranging from 4.30% to 5.00%, spreads are generally between 1.60% and 2.30%. Spreads compensate a lender for their risk, as well as provide for any profit that the lender will make as a result of the CMBS transaction.

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What are the Interest Rates for CMBS Loans in 2019?

What are the Interest Rates for CMBS Loans in 2019?

Currently, most CMBS loans vary between 4.30- 5.00%, with exceptions for particularly desirable or particularly risky properties. CMBS loan rates are generally based on the U.S. Treasury Index, plus a margin, also known as a spread, which compensates a lender for their risk and provides for their profits

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